Weekly Equities Summary and Outlook : February 12 – 16, 2018

Outlook. We expect the market to trade within 8,500-8,700 amidst the lack of catalysts. Investors remain on the sidelines ahead of more full-year 2017 earnings this week and US gross domestic product (GDP) next week. Last week, Jollibee Food Corp. and Ayala Land released their FY2017 net income, up by +15% and +17%, respectively, both in line with estimates.

Drivers. The reserve requirement ratio will give stocks some boost as the Php90bn additional liquidity tempers effects of the interest rate hike. The central bank’s 14-day facility is also set to siphon off excess liquidity. Corporate earnings are also being monitored. Continued rally in regional markets can also sustain the uptrend.

Market Review. Despite last week’s net foreign selling of Php3.2bn bringing year-to-date (y-t-d) net foreign selling to Php7.7bn, the market managed to close at 8,612.44, up +1.3% week-on-week (w-ow). Local trading dominated with a 64%-36% local-to-foreign split. Yesterday, the market continued its uptrend as it closed +1.1% higher day-on-day (d-o-d) to 8,710.22. Y-t-d, the PSEi was up 1.8%. Below are the key drivers:

Investors also bought up the financial sector, up +1.2% w-o-w and +2.6% d-o-d as the BSP reduced the reserve requirement ratio from 20% to 19% allowing banks to increase their lending portfolios.

The local bellwether also tracked regional markets’ rally. In the US, Dow Jones and S&P were up +4.3%. Meanwhile, in Asia, Hang Seng was higher by +5.4% w-o-w, the best performing in the region followed by Korea (+2.5%), China (+2.2%), and Singapore (+2.0%).

Foreigners sold JFC, SM, MPI, URC and JGS for a total of Php2.0bn. The most bought stocks were MBT and TEL amounting to Php124mn.